Trump’s Ire at Pharma Industry Pricing: An Opening for Biosimilars?

Every day of the newborn Trump Administration, sets of executive orders are issued and bunches of meetings with business icons are held. The tweets, orders, and conferences produce the same uniform message—disruption. This is probably good and bad for the health care industry. Certainly, in the short term, this is bad for patients. The pharmaceutical industry and health care delivery systems could benefit from some disruptive influence. However, the unintended consequences of these rapid-fire actions will be, as President Donald Trump might say, “huge.” Certainly, it will take time for the implications on patient care of each attempt at change to be fully felt, much less assessed.

The pharmaceutical industry has been the most recent focus of President Trump’s actions. The first salvo was his pronouncement that the pharma industry has been “getting away with murder” with regard to the pricing of their drugs. If this is truly a concern for the administration, then biosimilar manufacturers should be heartened to believe that ways to get their agents to the market sooner would be a focus. On the other hand, if the approach is more punitive towards those demonstrating little regard for affordability, then it would seem unlikely to be truly beneficial to biosimilar makers.

He also repeated a complaint to these executives that as a result of the high costs of these agents, he will have Medicare negotiate drug prices directly with the companies, taking advantage of its considerable leverage. This call has been made by others during the Obama Administration, but the drug industry had successfully detoured the discussions though its powerful lobbying efforts. Today, the confluence of other events, such as the highly contentious price escalations by Valeant and Mylan, widely publicized price increases for drugs like insulin and biologics, and Trump’s tweets, has convinced some in the pharmaceutical industry to heed this call, lining up to pledge limits in price increases.

Taking on the role of a business-friendly chief executive, the President announced at a meeting of industry leaders that he intends to slash most of existing Food and Drug Administration (FDA) regulations that apply to the industry and cut staff, yet bringing drugs to the market more rapidly. At the White House conference on January 31, he told leaders from Celgene, Johnson & Johnson, Merck, Novartis, and the trade group PhRMA that “we’re also going to be streamlining the process, so that from your standpoint, when you have a drug you can actually get it approved, instead of waiting for many, many years.”

However, the regulatory aspect of the discussions is confusing, because President Trump has also called for faster drug approvals by the FDA, while also streamlining the department. Beyond the time needed for FDA to conduct its full drug evaluations to ensure safety and efficacy, the agency is continually under pressure to quicken the rate of approvals, with limited staff to do so. In fact, I heard one industry consultant quip that with the present pharmaceutical pipeline, “it could take a century or more to approve all of these products at FDA’s current pace.” This staff is funded through PDUFA legislation. Yet, the President’s Administration has also called for a hiring freeze among federal agencies. Does this include the FDA? If so, it seems that hopes for speeding the process would have to rest on streamlining the evaluation process itself, which would likely face a good deal of public, health provider, and academic resistance.

Finally, President Trump warned that more than three-quarters of FDA regulations will be slashed. No one can be sure which regulations he was alluding to at this time, but it does sound as if the pharmaceutical industry will be the beneficiary. However, these pronouncements do sound like promises that cannot be practically fulfilled or well considered.

The FDA exists for consumer protection, not for the enrichment of the pharmaceutical industry. Regulation is necessary in private health markets (as for any private market), for the sake of patients, the health economy, and population health improvement. Shareholders need regulatory protection, as well, just not from the FDA.